Poplawski v Pryde - [2012] NZHC 2011

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV 2011-425-000117 [2012] NZHC 2011

BETWEEN ZBIGNIEW JAN POPLAWSKI AND STEFAN DAVID POPLAWSKI Plaintiffs

ANDTHOMAS MCNEIL PRYDE First Defendant

ANDCRUICKSHANK PRYDE Second Defendant

AND TE ANAU INVESTMENT NO. 1
LIMITED
Third Defendant

Hearing: 31 July, 1 and 2 August 2012 (Heard at Queenstown)

Counsel: P W Michalik for Plaintiffs
M E Parker and A J Nash for First and Second Defendants

Judgment: 10 August 2012

JUDGMENT OF WHATA J

Introduction

[1] Stefan Poplawski and his father Pop wanted to buy a helicopter from Mr Thow and then lease it back to him. Mr Thow wanted to buy the assets belonging to South West Helicopters Limited (“South West”). To achieve their desired outcomes, they verbally agreed that Pop would transfer $350,000 to South West on the condition that Stefan would receive a 50% shareholding in the company buying South West’s assets as temporary security pending the purchase of the helicopter. Stefan asked Mr Thow to get his lawyer to outline the arrangements in
writing. Mr Pryde was South West’s lawyer, but at Mr Thow’s behest, he wrote an

POPLAWSKI V PRYDE HC INV CIV 2011-425-000117 [10 August 2012]

email dated 22 July 2009 to Stefan’s lawyer recording that the sale of South West’s assets was “unconditional,” with possession on 29 August 2009, and attaching a schedule of the assets. He also recorded Mr Thow’s agreement to transfer 50% of the shares in the company buying the asset, “as a temporary security” pending completion of Stefan’s deal with Mr Thow.

[2] Stefan’s lawyer advised Stefan to be careful and suggested additional security. But Stefan and Pop thought the risk was small because South West’s assets were going to transfer to the new company. On 27 July 2009, Pop transferred the
$350,000 to Stefan. On 28 July 2009, Stefan transferred the $350,000 to South West. Mr Thow defaulted on settlement payment that was actually due on 29 July and on an extended settlement date of 7 August. South West cancelled the agreement, kept the deposit, and then on 2 September, sold the assets to a different company. Stefan’s shareholding in the new company was worthless. Mr Thow was bankrupted. Pop lost his money.

[3] Stefan and Pop claim that Mr Pryde’s email was seriously misleading. It did not refer to the multiple occasions over the previous seven months that Mr Thow had defaulted on payments to South West. It did not record that Pop’s $350,000 was in fact critical to keeping the sale and purchase agreement alive. It did not say that Mr Thow only had seven days from the email to come up with at least another
$1.5 million to settle the purchase. They contend that Mr Pryde must have known that Mr Thow could not be relied upon to settle in such a short period and yet said nothing. Had they known this, they would never have transferred the money.

Issue

[4] I must resolve whether Mr Pryde’s email was misleading conduct…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Poplawski v Pryde

Details

AGLC: Poplawski v Pryde [2012] NZHC 2011
Case: [2012] NZHC 2011
Decision Date: 10 August 2012

CaseChat Overview and Summary

The plaintiffs, Stefan and Pop, sought to buy a helicopter from Mr Thow and lease it back to him. To do this, they needed to buy the assets of South West Helicopters Limited (South West). They reached an agreement with Mr Thow, who was to buy the assets of South West, that Pop would transfer $350,000 to South West on the condition that Stefan would receive a 50% shareholding in the company buying South West’s assets as temporary security pending the purchase of the helicopter. The plaintiffs sought to have the lawyer for South West, Mr Pryde, confirm the terms of the arrangement in writing. Mr Pryde sent an email to Stefan’s lawyer recording the terms of the arrangement, but omitted various important facts. The plaintiffs claim that the email was misleading conduct for the purposes of s 9 of the Fair Trading Act 1986. The court found that the email was capable of being misleading but that a reasonable person in the plaintiffs’ position would not have been likely to have been misled. The plaintiffs were represented by their own lawyer, who advised them to obtain security. The court found that the plaintiffs’ own carelessness was a significant contributor to their loss. The court held that Mr Pryde’s email did not breach s 9 of the Fair Trading Act 1986. The court reserved leave to the parties to seek costs.

Orders